Shoes charity sells more soles than it gives away

By Bob Smietana, The Tennessean

Millions of pairs of used shoes donated to Soles4Souls by churches, civic groups and individuals don't go directly to the impoverished people the charity says it is helping.

By Wilfredo Lee, AP

Javier Rolon, from a company that maintains roadways, bags shoes dumped on a Florida road that were donated to Soles4Souls, a shoe charity based in Nashville. The shoes weren't given to poor people; they were sold to middlemen instead.

Javier Rolon, from a company that maintains roadways, bags shoes dumped on a Florida road that were donated to Soles4Souls, a shoe charity based in Nashville. The shoes weren't given to poor people; they were sold to middlemen instead.

Instead, the Nashville, Tenn.-based charity ships most of the donated used shoes to for-profit wholesalers and collects a handling fee. The wholesalers then ship the shoes overseas. There, vendors sell the shoes in marketplaces.

The practice, which Soles4Souls calls its microenterprise program, brought in about $2.89 million in fees for 2009, according to Soles4Souls' tax return for that year. A Soles4Souls official defended the program, saying it creates jobs for poor people.

"We do not sell shoes," said Todd McKee, general counsel and chief administrative officer. The funds collected are handling fees, he said, used to defray operating costs at Soles4Souls. McKee said the charity's attorneys and outside auditors reviewed the microenterprise program and approved it.

But some say the charity fails to live up to its promises to give shoes away. Others question the whole idea of shipping donated shoes overseas. The practice does more harm than good, they claim, by flooding markets with used shoes and driving shoemakers in poor countries out of business.

In his new book, Almost Isn't Good Enough, Soles4Souls CEO Wayne Elsey says he founded the charity with one simple goal in mind: Collect shoes and give them away.

So when the charity filed its form 1023 requesting tax-exempt status in 2006, organizers told the IRS that donated shoes would be sent to charities that would give them away to people in need. "Soles4Souls, Inc. sends the footwear to the charities in these countries that have pledged not to sell the shoes. The shoes are to be given only to the people in need," organizers wrote on their application.

Soles4Souls sticks to that mission with the new shoes it collects — about 5.4 million in 2010, mostly excess inventory from shoe companies. Those companies receive tax breaks for the donations. Soles4Souls valued those donations on average at $30 per pair for men's shoes, $27 per pair for women's shoes, and $16 per pair for children's shoes, according to its financial statements.

When Soles4Souls got 48,953 pairs of works boots from the Red Wing Shoe Co., those were valued at $55 a pair. With the new shoes, Soles4Souls acts mostly as a middleman — taking donations from companies like Red Wing, Deckers and Under Armour and passing them on to other charities.

Those charities give away the new shoes in more than 130 countries around the world, Soles4Souls says.Soles4Souls does not disclose the names of the charities or for-profit groups that distribute any shoes collected as a matter of policy, spokeswoman Rosemary Plorin said.

And it collects no data on where the shoes end up. Instead the distributors send Soles4Souls photos, videos and narrative summaries of their work. Soles4Souls took in 3.7 million pairs of used shoes in 2010, said Plorin. Each used pair was valued at $4. That allowed the charity to claim $14.8 million in donations on its balance sheet.

Most used shoes go from Soles4Souls warehouses to wholesalers such as Gilbert Lawson of for-profit Tevitus Inc. of Cartersville, Ga. Lawson ships the used shoes to his business associates in Togo, a small nation in West Africa. From there, the shoes are sold to merchants, who sell them in markets in Togo and other West African nations.

Lawson said he's glad he's helping the people who sell the shoes, but unlike other microenterprise programs — which often offer classes in basic accounting and provide other support — Tevitus Inc. is strictly business.

"I give poor people used shoes on credit to sell," Lawson said. "They pay me back after sale. That way it provides jobs and shoes."

Lawson refused to reveal details of his business, such as how many shoes he gets from Soles4Souls, which African businesses buy the shoes and what they charge retail customers. He pays Soles4Souls 50 or 75 cents per pair and buys them by the truckload. So does Kurt De Pourcq of Shepitex LLC of Hamburg, N.J. De Pourcq buys shoes from Soles4Souls and shoes and used clothing from charities like Goodwill and the Salvation Army, selling the goods to his contacts in countries that include Tanzania, Kenya, Guatemala, Pakistan, Chile and Georgia.

"It's a penny business," he said. "You make money on volume."

He said most charities that collect used goods and sell them deal with the same issues — some donations are worthless, and others aren't suitable for use in developing countries. A recent visit to Soles4Souls' warehouse in Roanoke, Ala., for example, revealed a pair of Stuart Weitzman strappy, high-heeled sandals lying in the mud outside the loading dock. De Pourcq's job is to find someone willing to take any donation, even those.

"People give a lot of crap away," he said. "I have a market for everything." De Pourcq said he's glad his business helps create jobs overseas, but it is still a business. And he doesn't blame charities for selling their donations.

Churches collect shoes

Soles4Souls runs four warehouses for shoe donations: one in Nashville, two in Alabama and one in Las Vegas. The charity also partners with the nonprofit group Village

Northwest Limited, in Sheldon, Iowa, where disabled residents sort shoes. Their main warehouse formerly was in the small town of Roanoke, Ala., where the closest neighbors were cows in a field next door and the runway from a nearby airport.

In January, Soles4Souls bought another Alabama warehouse in nearby Wadley. Most of the used shoes — collected at shoe drives run by schools, churches, businesses, celebrities and individuals around the country — end up in Alabama, where they are sorted by size and quality.

Cross Point Church in Nashville collected 3,000 pairs of shoes after a "Barefoot Sunday" church service in December. Church members were asked to leave their shoes in the church and walk out barefoot. Rose Park Magnet School collected 600 pairs of shoes for Soles4Souls in a December shoe drive. The shoes can be dropped off at or shipped to Soles4Souls warehouses.

The donor pays the shipping charges in most cases. Once the shoes are sorted, they are shipped to distributors, but getting details of where the shoes go is difficult. Soles4Souls said in an early January email that it had delivered 1.3 million pairs of shoes to Haiti since the earthquake hit the island nation in 2010.The charity's volunteers have handed out 20,000 pairs.

Soles4Souls runs a travel program where volunteers pay their way to countries like Haiti in order to hand out shoes. Pictures and video from those trips are used in Soles4Souls marketing campaigns. The charity says it has sent shoes to Haiti through about 12 partner organizations but only revealed the names of two groups — Operation Compassion of Cleveland, Tenn., and John Chew, a microenterprise program participant who has distributed about 4,000 shoes in Haiti.

Many unaware of sales

The difference between Soles4Souls and other shoe- and clothing-collecting charities like Goodwill and the Salvation Army is that those other groups specifically tell donors that their used goods will be sold and used to support their program. Soles4Souls, on the other hand, asks for shoe donations so that it can give them to people who are shoeless.

In the past, Soles4Souls downplayed its microenterprise program. For example, last fall, the Nashville-based charity sent out an urgent plea for help.

"Soles4Souls Inc., the shoe charity that gives away free shoes to people in desperate need, is running out of shoes," the Sept. 9 media release read. "The non-profit organization has responded aggressively to the many natural disasters around the world and has nearly depleted its stock of both new and gently worn shoes."

Soles4Souls' Elsey did a follow-up interview on WKRN-TV in Nashville, begging for donated shoes. "We need to take our child into the closet and say, 'Look, you have six extra pair of shoes, let's donate those to Soles4Souls.' Because there's 300 million children around the world that don't have a pair of shoes."

The charity, which recently launched its "11 in 2011" campaign to collect 11 million shoes in 2011, revealed additional details of its microenterprise program on its website after a Tennessean inquiry.

"Lower grade used shoes are sorted and packed for distribution, and some are provided to microenterprise programs in developing countries such as Haiti, Tanzania, and Honduras," the Soles4Souls website says.

"The microenterprise participants clean and recondition the shoes to sell locally."

"Some" turns out to be between 60% and 78% of the donated used shoes each year, Plorin said.

But some donors believe their shoes go directly to someone in need. Kara Palm, local marketing coordinator for Krispy Kreme Donuts, takes about 100 pairs of shoes to Soles4Souls' warehouse each week.

Palm said she set up the connection between Krispy Kreme and Soles4Souls because she believes in the charity's you-give-they-get mission. "People donate shoes to Goodwill all the time," she said. "In this case, it's more direct. Give shoes and someone else gets shoes. People can see the benefit."

Later, after she was contacted about the microenterprise program, Palm emailed this statement: "Soles4Souls is a company that not only provides shoes to individuals, they provide employment and support to impoverished communities across the world. Because Krispy Kreme is a company that seeks to support our local communities, we couldn't help but be involved."

Brian Williams runs ThinkKindness.org, a nonprofit that seeks to inspire kids to perform random acts of kindness, and is trying to collect 100,000 shoes for Soles4Souls. Williams said the donated shoes are a tangible sign that kids can make a difference in the world.

"At the end, we're going to have a pile of 100,000 shoes," he said. Williams believed those shoes would be sent to Soles4Souls warehouses and then shipped to people in need. He was unaware of the microenterprise program. When told about it, he said he hoped the ones his organization collects will be given to earthquake victims in Japan through Soles4Souls. But if the donated shoes end up in the microenterprise program, he can support that.

"If people can earn money, that's great," he said.

At First Baptist Church in Murfreesboro, children are collecting shoes for Soles4Souls as a mission project. Sharon Hay, children's minister, said she was surprised to hear that donated shoes end up being sold.

"I was not aware of that," she said. Hay said she usually checks carefully into charities before supporting them. She planned to follow up with Soles4Souls.

News that many donated shoes are sold saddened one of Soles4Souls' earliest supporters. Mellie Parrish was one of the nonprofit's first employees in Alabama, before the microenterprise program. Parrish had been a volunteer with Four Corners Ministries, a missionary group that distributed some of the first shoes Soles4Souls collected. She eventually became Elsey's secretary — before the main offices relocated to Nashville — and is now retired.

"Randolph County, Ala., is an area of Alabama with rich traditions of mission work, and out of one of the county's mission groups, Soles4Souls was begun," she said. "I would find it very sad if it is true that this organization is now selling shoes it was donated. Truly, it was not the intent to sell shoes in the beginning."

Haitian women helped

Often, microenterprise programs provide loans to poor people but not the support structure needed to help them succeed, said Steve Bradley, assistant professor of management and entrepreneurship at Baylor University in Waco, Texas. That means classes on how to run a business and support for finding new business ideas.

"People don't just need money — they need ideas," Bradley said. "I think there is a lot more need for support once the business is running and help in coming up with more innovative business ideas.

"The beauty of the microenterprise we support is that shoes are a durable commodity that is easy to transport, widely needed, and easy to sell," McKee said in an email. "Micro-enterprise operators can literally receive the shoes, carry them to the nearest marketplace, and start selling. In many cases, they will receive the shoes on credit and pay for them after sale. At most, cleaning the shoes is all they do to prepare for sale."

But John Chew, who runs a microenterprise program in Haiti using Soles4Souls shoes, said it isn't that simple. Chew, an American businessman who has lived in Haiti on and off since the 1980s, has assisted Soles4Souls and other charities that do work there.

Chew started his program in the summer of 2010. A group of about 20 women get basic training in accounting and business and meet in small support groups. "What we do is we get people in co-ops, we do a seminar with them, we teach them how to do financing, how to run a business, how to keep accounting and their books," he said. "Then we set them up with some shoes to get started."

The women get one box of shoes — containing about 40 pairs — for free from Chew. After that, they pay about $2 a pair. The shoes are sold in the marketplace for $5 to $10 a pair." Here in Haiti, these shoes are gold," he said. "A lot of time the Haitian shoes that are made here, they don't last long. Everyone is looking for foreign-made shoes, because even if they are second hand, they last a lot longer than the shoes that are new here."

Chew said that the supportive programs and classes are essential for the women's microenterprises to succeed.

"A lot of times they don't last, because nobody taught them how to manage their money, manage their time, how to deal with customers, keep enough money to buy your supplies," he said. "That's why it's important to help them understand finance and help them understand how microenterprise works — and how to keep your business going. You don't want to start something and have it end."

A former aid worker who blogs about overseas aid for the Chronicle of Philanthropy said programs like Soles4Souls could undermine local business in developing countries. Saundra Schimmelpfennig is critical of programs based on sending "stuff we don't want" overseas."

We are creating this culture of dumping stuff we don't want on other people," she said. "We don't want it so we send it over there." But programs that ship large quantities of used shoes or clothing overseas won't go away any time soon, she said, because donated used goods help nonprofits boost their bottom line on public financial reports.

Donating used shoes also makes people feel good, Schimmelpfennig said. "We are doing it because it works for us," she said. "This is based on our needs."

Even if Soles4Souls' program isn't perfect, some supporters argue that it still does good work. Clark Bosslet is a graduate student at Vanderbilt, studying social entrepreneurship. He said that doing good work is sometimes messy.

Sending used clothes overseas may undercut local businesses, he admits. But groups like Soles4Souls can also create jobs, allowing people to make money for themselves rather than relying on charitable donations." At the end of the day, there is still a net benefit to society," he said.

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